March 31, 2026
Commentary
Year-to-date to March 31, 2026, the Ninepoint Balanced+ Fund generated a total return of 5.76% compared to a 60/40 TSX Composite TR/XBB Blend, which generated a total return of 2.46%.
NINEPOINT BALANCED+ FUND - COMPOUNDED RETURNS¹ AS OF MARCH 31, 2026 (SERIES F NPP1029) | INCEPTION DATE: MARCH 7, 2024
1M |
YTD |
3M |
6M |
1YR |
INCEPTION |
|
|---|---|---|---|---|---|---|
FUND |
-1.21% |
5.76% |
5.76% |
10.21% |
18.76% |
18.51% |
If investors thought that 2025 was wild, the first quarter of 2026 did not offer much relief. The year began optimistically, with solid global growth indicators, resilient labour data and bullish investor sentiment. Although there was some rotation to more cyclical sectors underneath the surface, the AI-trade was still mostly working and the details contained in President Trump’s OBBB implied that bigger tax refunds would bolster consumer spending, essentially the biggest engine of the US economy. Analysts were feeling confident, with consensus estimates calling for revenue growth of 7.3% and earnings growth of 14.9% for 2026 (according to FactSet), suggesting another year of double-digit returns at the index level. Finally, monetary policy looked to remain supportive in 2026, with at least two more interest rate cuts priced in by the end of the year.
Unfortunately, by late February/early March, the mood darkened. The United States and Israel launched coordinated airstrikes against Iran, justified as pre-emptive, defensive operations to destroy Iranian nuclear and missile programs and eliminate senior leaders of the regime. But retaliation was swift and surprisingly robust, with neighbouring states surrounding the Persian Gulf and US bases in the area facing an onslaught of drones and missiles. Iran also made use of its most effective weapon by closing the Strait of Hormuz, a critical chokepoint for approximately 20% of the global oil trade. From an economic perspective, the effects were almost immediate with Brent crude spiking close to $120 per barrel (from below $70 per barrel) and WTI crude topping $115 per barrel (from below $65 per barrel).
The spike in oil prices opened the stagflation playbook, with higher inflation expectations triggering the bond market to price in two rate hikes instead of two rate cuts in 2026 and the US dollar to appreciate, both of which reduced growth expectations and therefore lowered equity market valuations as volatility measures exploded higher. Admittedly, some sectors did well during the selloff, with energy and energy-related equities rallying along with defensives such as utilities. Interestingly, the NASDAQ entered a correction (declining more than 10% from its record high) as the Mag7 underperformed but the S&P 500 didn’t quite get to correction territory (only falling approximately 9% from peak to trough).
Given the risk of an extended oil shock, we think the markets have been remarkably well-behaved, likely because investors have been conditioned to expect a policy flip-flop from the current US administration (think the “Liberation Day” tariff rate TACO). However, we are mindful that resolving the war in the Middle East and reopening the Strait of Hormuz requires other parties to agree to terms. After decades of managing money through various cycles and crises, we are generally optimistic over the long term, but the current environment is testing our patience.
Top contributors to the year-to-date performance of the Ninepoint Balanced+ Fund by Fund included the Ninepoint Energy Fund, the Ninepoint Global Infrastructure Fund and the Canadian Large Cap Leaders Split Corp, while the Ninepoint Global Select Fund, Microsoft and Eli Lilly detracted from performance on an absolute basis.
Our current target capital allocations, by underlying weights, are as described in the table below:
Target Capital Allocations
Over the first three months of the year, the macroeconomic outlook shifted dramatically, which had an impact on the price of oil, inflation expectations, interest rates and global growth expectations. In response, and guided by our PRISM risk model, we increased the Fund’s total equity target to 72.5% from 70% at the start of the year. This was primarily driven by an increased allocation to the Ninepoint Energy Fund, which was raised to 15% from 10% earlier in the year. The decision was based on improving commodity fundamentals and a geopolitical risk premium that enhanced the sector's risk-reward profile.
Despite the challenging investment climate, we remain focused on constructing a diversified tactical balanced fund using various asset classes that have low correlation to each other to improve portfolio's overall risk-adjusted returns.
Jeff Sayer, CFA
Ninepoint Partners